Agreement Trade China Pacific

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					Role of Regional Trade Agreements
 with Specific Focus on the Asia-
     Pacific Trade Agreement

 International Workshop on “Central Asia and China:
Economic Relations, Current Situation and Prospects”
        11-12 July 2006, Siam City Hotel, Bangkok



                  Tiziana Bonapace
              Chief, Trade Policy Section
       Trade and Investment Division, UNESCAP
                                 RTAs in Asia and the Pacific
                                            Trade agreements signed in Asia and the Pacific

                          70
                                                                                                                          64
                          60
Trade agreements signed




                          50

                          40


                          30


                          20                                                                                     17
                                                                                                         12
                          10
                                0       0       0       0       0       1            0    2       0
                          0
                               47-50   51-55   56-60   61-65   66-70   71-75     76-80   81-85   86-90   91-95   96-00     00-
                                                                                                                         present
                                                                            Period
   Evolution of Asia-Pacific Regionalism
Broadly 3 waves
First wave (50s/60s/70s):
– 1950 Conference on Asian/African cooperation in Bandung,
  Indonesia, the precursor of the non-aligned movement.
– Import-substitution industrialization strategy becomes development
  model. South-South cooperation based on strategic selection of tariff
  liberalization among members to promote industrialization. Inward
  looking with high tariff walls to keep out imports competing with
  “infant industries”.
– First RTA signed in 1975: Bangkok Agreement
Second wave (80s/90s):
– unsustainability of import-substitution model, globalization
  accelerates and results in north/south interdependence. Outward-
  oriented, “open regionalism” i.e. faster liberalization among RTA
  “friends” while at the same time lowering barriers to third parties
    Evolution of Asia-Pacific Regionalism
Second wave:
 – Establishment of APEC based on non-discriminatory principles
   in its strictest interpretation, conclusion of UR
 – Rapid increase in membership to GATT/WTO.
 – Regionalism and multilateralism enter golden age of mutually
   supportive liberalization

Third wave (Late 1990s-present):
 – financial crisis
 – stalling of APEC process of liberalization
 – stalwarts of MFN (Japan and Rok) turn regional, as well as
   China who completes most difficult part of internal
   transformation.
 – New era of deep and wide economic partnership agreements,
   with FTA as core, but much wider economic cooperation as well
 – Bilateralism is key feature
                     Main regional integration arrangements of UNESCAP members
                                         and associate members
              ECOTA
              Afghanistan
              Azerbaijan             SAFTA
                                                   BIMST-EC
              Iran (Islamic
                Republic of)         Maldives
                                                   Bhutan
              Turkey                               Nepal
              Turkmenistan
                                                    APTA
EEC             CAEU
                                                    Bangladesh
Belarus*        Kazakhstan
                                                    India
Russian         Kyrgyzstan                          Sri Lanka
 Federation     Tajikistan
                                     Pakistan
                Uzbekistan
Armenia
Georgia
          ASEAN                                    Lao People’s Democratic Republic

           Cambodia                                  Myanmar

                            APEC                     Thailand                       China
                            Brunei Darussalam                                       Republic of Korea
                            Indonesia
                            Malaysia                                               Chile*
                            Philippines                                            Hong Kong, China
                            Singapore                                              Japan
                            Viet Nam                                               Mexico*
                                                                                   Russian Federation
                                                                                   Taiwan Province of China*
                                                                                   United States of America
                                                                                   Canada*
                                                   ANZCERTA                        Peru*

                                                     New Zealand

                                                     Australia

                                     PICTA



                                        Melanesian Spearhead Group
                                        Papua New Guinea

                                        Fiji
                                         Solomon Islands
                                         Vanuatu
                                     Cook Islands
                                     Kiribati
                                     Nauru
                                     Niue
                                     Samoa
                                     Tonga

          Block refers to              Line refers to some of the major           * Belarus, Chile, Canada, Mexico
          regional                     bilateral agreements (country-to-country     and Peru are not ESCAP
          arrangements                 or bloc-to-country) in force or under        members or associated
Source: UNESCAP Secretariat            negotiation                                  members
  Where Does Asia-Pacific Stand?: New Age Regionalism
Despite density of agreements, concluded agreements are generally
„lite‟, particularly those among developing countries
     liberalization shifted to future (10 years or more)
     significant exceptions in goods
     rules of origin restrictive
     services not covered
     investments covered, but focus more on investor protection than
     locking in investment liberalization
     dispute resolution mechanisms not well defined

However, agreements involving developing and developed countries
much more comprehensive.
     services, TRIPs, investments and other WTO+ features are prominent
     increasing public concern regarding asymmetric negotiating powers
     calls for greater democratization of trade policy formulation:
     strengthened consultative mechanisms (bottom-up), increased role for
     parliamentarians as interface between societies and policy making
     executive branch
Where Does Asia-Pacific Stand?: New
        Age Regionalism

Other forms of regional economic
cooperation also continue
  Growth triangles/quadrangles, EPZs, SEZs
  Many forms: intergovernmental/private
  sector driven
  Common themes: riparian cooperation,
  transport corridors, energy selfsufficiency.
Where Does Central Asian Regionalism Stand?

   Numerous economic cooperation schemes
    and BTAs/RTAs.
   Renewal of economic cooperation after
    collapse of USSR
   WTO membership a priority for most. Also
    allows regional integration to proceed more
    effectively   Armenia, Georgia, Kyrgyzstan
   SPECA – Economic Cooperation Programme
    by 2 UN regional Commissions: ESCAP + ECE
Where Does Asia-Pacific Stand?: New Age Regionalism
             and the Contagion Effect
    Domino effect
       Fear of marginalization (not being able to share benefits of
       membership) as more and more countries become members of FTA
       Originally used to explain successive waves of EU expansion
       Fatigue with multilateralism
       Disenchantment with APEC as a driver of liberalization,
       Aftermath of 1997 financial crisis and disappointment with global
       response and policy prescriptions: few countries untouched,
       rekindled common destiny bonds and regional identity
       Turning point: ASEAN+China+Japan+RoK, Singapore took lead in
       BTAs
    Competitive regionalism
       Secure trade interests and establish sphere of influence that goes
       beyond trade
       United States now trend setter, also Japan.
       Used as strategy to pressure non-members to join or enter into
       broader trade agreements
   Defensive and offensive mutually reinforcing strategies at play
New Age Regionalism: Where is Asia-
          Pacific Going?

At what configuration will this process come to rest?
Emergence of natural hubs: large trading country
establishing trade hegemony, linked to a series of
spokes (developing countries)
A developing country hub may also emerge: a
defensive hub seeking to avoid spoke position with
trade hegemon
Mulilayered strata of hubs and spokes emerging
Through time, gravitational force of one hub linked to
rest of region through spokes may be final resting
point
  New Age Regionalism: Where is Asia-
            Pacific Going?
Role of ASEAN: option of developing countries
collectively establishing themselves as alternative hub?
Has ASEAN managed to overcome internal differences
associated with its diverse membership? Can ASEAN
move from shallow to deep integration?
Spinning top - centrifugal force driven by an inertia – at
the center- that acts outwards and draws energy from a
body moving about the center. How can the force be
directed towards the center? Can the ASEAN Charter, or
the dynamism of +1+1+1 countries, or a conclusion of
the Doha Round impart the energy needed for ASEAN to
harmonize policies and achieve deep integration?
    Policy Implications and Negotiating
                 Strategies

 To promote trade for development, there is
  a need for geographical and functional
  harmonization and consolidation of the
  many RTAs through.…
 …the establishment of common principles,
  practices, and operational procedures for
  liberalization initiatives, in both trade and
  investment
 As a first step, start with a comprehensive
  framework on RoO
  New Age Regionalism: Where is Asia-Pacific Going?

A. Geographical Consolidation
     Historical conflicts, wide variations in political, legal
     systems, cultural values. Fear that integration will
     become dysfunctional.
     Expansion of EU membership a positive example of
     geographical consolidation. More than 65 bilateral trade
     agreements notified to WTO abrogated when EU
     expanded
     Crucial differences between EU and Asia
     Customs Union vs FTAs. Geographical proximity much
     more relevant for CU than FTAs. No example of CU
     among geographically dispersed countries such as in
     cross continental BTAs of Asia
     Is Customs Union with common external trade policy
     and deep integration sine qua non for geographical
     consolidation?
                       Integrating East, South-east and Central Asia
                                                              ECOTA
                                                             ECOTA
                                                             ECOTA
                                                            Afghanistan
                                                          Afghanistan
                                                          Afghanistan
                                                        Islamic Rep. Iran
                                                      Islamic Rep. of of Iran
                                                      Islamic Rep. of Iran

                                                               Turkmenistan
                                                         Turkmenistan


                                                                                       CIS EU

                           Moldova                            Kazakhstan
             EurAsEC       Ukraine                            Kyrgyzstan
            Belarus                             Russian       Tajikistan
                                                Federation
                            Armenia
                                                              Uzbekistan                                       + China
                                                                                                                                  SCO
                                                Azerbaijan


                                                                                                                China
                          BSEC                    Turk ey
                          Georgia                                                                                             +Japan
                                                                                                             +Republic   AFTA
                                                                                                             of Korea      Indonesia
                          (Albania, Bulgaria,
                           Greece, Romania)
                                                                                             APTA                          Malaysia
                                                                                                             Lao PDR       Philippines
                                                                                                                     Brunei Darussalam
                                                                                                                            Singapore
                                                                                                                            Viet Nam
                                                                                                                            Cambodia

                                                                                       India
                                                               Pak istan
                                                                                       Bangladesh
                                                                                       Sri Lank a                  Thailand

Note: WTO members are in italics.                                                                                   Myanmar
                                                                                                    Bhutan
      Armenia, Moldova, Ukraine: Observer                       SAFTA
      Status of EurAsEC                                                     Maldives           Nepal
                                                                                                       BIMSTEC
  New Age Regionalism: Where is Asia-Pacific Going?

B. Functional cooperation and consolidation
   Asia-Pacific could also evolve its own form of consolidation, based
   on pragmatism, flexibility and outward orientation which have
   served the region well up to now

   Adoption of common framework of principles, practices and
   procedures that puts regionalism as a building block of
   multilateralism on a more solid and commonly shared foundation

   Rules of origin one key area. APTA representing a wide spectrum
   of industrial development across the region has evolved a set of
   common rules of origin, based on flat percentage rate 45 per cent
   (35 per cent for LDCs) local content that may imply an acceptable
   commonality

   Investment (proliferation of BITs) and coherence with investment
   provisions in BTAs?
  New Age Regionalism: Where is Asia-Pacific Going?

C. Integration through enhanced institutions
    Numerous regional organizations such as UNESCAP, ADB,
    ASEAN, SAARC APEC, Pacific Forum Secretariat are in good
    position to draw out commonalities and work on common
    principles, best practices, modal agreements.
    Bold mandates and resources lacking, and more importantly,
    these institutions are intergovernmental, member driven
    Is there a need for a more formal supranational system of
    regional governance or are current intergovernmental
    institutions sufficient?
    Can institution driven integration of EU offer useful example?
    Need for balancing vision with realism: more effective use of
    existing institutions. Cost effectiveness of creating new
    institutions?
    Deep policy, political and historical differences among countries
    of the region might prevent supranational governance?
   APTA: A Bridge across Asia

Signed in 1975 as an initiative of UNESCAP,
the Bangkok Agreement, now APTA, is
Asia‟s oldest preferential trade agreement
between developing countries.
It aims to promote regional trade through
an exchange of mutually-agreed
concessions.
Bangladesh, China, India, Republic of
Korea, Lao PDR and Sri Lanka are member
countries.
Region-wide membership potential
Only RTA in which two most populous and
fastest growing economies are members
(i.e. China and India)
Through China and India linkages with
other RTAs in the region can be
established (e.g. AFTA, BIMSTEC, SAFTA)
    Expanding Membership

Status: China‟s accession in particular
makes membership more attractive to
countries in the region
Efforts are being taken to expand
membership. Mongolia and Pakistan have
indicated intention to join, others have
expressed interest
Next target: Central Asia
THANK YOU!

				
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